Managing Billable vs. Non-Billable Time as a Freelancer
Unlike a regular employee, a freelancers time is divided into two separate categories: working hours and billable hours. It's not unusual for freelancers to spend a lot of time on non-billable tasks, especially in the beginning stages when marketing and advertising will be a priority in order to land your first few clients. Managing working time and billable hours can be a gray area, but you can make it easier by outlining parameters for yourself and your client at the beginning of a design project:
Non-billable time may include...
- Communication and correspondence (e-mails, initial consultation meeting)
- Administration tasks (paper work, filing, expense tracking, invoicing)
Billable activities may include...
- Actual time spent on production work
- Project planning and research
- Scheduled client meetings and phone calls
- Unplanned client communications
What can you bill for?
Sometimes. there's a fine line between what can be billed for and what can't. If a client calls unexpectedly — does that count as billable time? Usually, yes. What if it was only a 10 minute phone call? You'll have to determine whether you want to track that or not. I normally don't bother charging clients for small correspondences because I make that clear in my client boundaries and expectations before a project starts. Therefore, it never ends up becoming an issue or an unexpected expense for the client.
When I started freelancing, I was working from my parent's house, with no worries about rent or other large expenses. Now that I'm on my own, it's forced me to look at my finances more seriously. I have to understand how many hours a week I can work, and at what hourly rate, to be able to live comfortably.
Tracking your billable and non-billable time allows you to more easily make changes if you know you might be tight on cash one month. If you've had a good month, maybe you can afford to spend more time on networking or blogging (both of which are good investments).
If you are still having trouble understanding if you should bill a task, ask yourself a few questions:
- Did I put in writing (a contract or e-mail) that I was able to charge for this?
- Was this activity asked by the client or was it a mistake you made?
- Does this task specifically help me complete this project?
- Does this task benefit me more than the actual client?
How do you manage your billable vs. non-billable time as a freelancer?